Demand for fixed home loans make a comeback in September: Mortgage Choice

Mortgage broking firm Mortgage Choice have seen the demand for fixed rates rise in the month of September to the highest level since December 2017.

Last month they saw 24 percent of all loans written to be fixed, up six percent from August.

Queensland and New South Wales are the most likely to choose a fixed rate mortgage, both with over 26 percent of their total loans being fixed.

Victoria has seen the lowest level of fixed rate demand for eight consecutive months, however demand for this type of product rose to almost 17 percent in September – an increase of almost four percent on the month prior.

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Susan Mitchell, CEO of Mortgage Choice, said the shift in borrower demand was largely anticipated given the recent changes in the lending landscape. 

“September’s data is unsurprising when you consider the recent rate hikes to variable rate home loan products announced by three of the four major banks. This would no doubt be encouraging more borrowers to fix,” Mitchell said.

“History has shown that when the majors lift their rates, smaller lenders are quick to offer competitive pricing on their own products in order to attract borrowers in search of a better deal. However, we have seen limited market movement due to a combination of factors such as the regulatory environment and increasing wholesale funding costs which would no doubt be affecting smaller lenders. 

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“Institutions across the country have become more selective about the customers they lend to, vying for borrowers in a healthy financial position. Indeed, lenders are seeking high-quality borrowers who present low risk. 

“This highlights the need for borrowers to review their current home loan and financial situation with the help of a qualified mortgage professional and financial adviser to ensure they are best placed to secure a competitive deal when they choose to switch loan providers.” 

Mitchell noted that, when home loan interest rates are on the rise, borrowers may want to consider fixing part or all of their home loan, safeguarding against further rate rises and allowing for repayment certainty each month. 

“Due to the current tightened lending criteria and lender’s reduced appetite for lending, I would encourage anyone looking to secure a home loan to speak to their local Mortgage Choice broker who can help them navigate the complex lending environment and find a loan to suit their unique financial needs.